Last updated: February 6, 2024
What is the Lifelong Learning Plan (LLP)?
The Lifelong Learning Plan (LLP) is a government program that allows you to withdraw money from your RRSPs to finance post-secondary education or training. You can withdraw up to $10,000 in a calendar year from your RRSPs to pay for a full-time training or education for you, your spouse or common law partner.
Participating in the LLP doesn’t allow you to finance your children’s training or education, or that of your spouse or common law partner’s children. However, you may consider an RESP to save for your children’s education.
How much can you withdraw from the LLP?
If you meet all the required conditions, the LLP allows you to withdraw amounts from your RRSPs until January of the fourth calendar year after the year you made your first LLP withdrawal. Amounts withdrawn cannot exceed $10,000 per calendar year and can’t exceed $20,000 in total.
For example, if your make your first LLP withdrawal in January of 2024, you’ll be able to make additional withdrawals (not exceeding $10,000 per year) until January of 2028 (not exceeding $20,000 in total during the four years).
How do LLP repayments work?
You have up to 10 years to repay your RRSPs under the LLP. Generally, for each year, you must repay 10% of the total you withdrew until you’ve repaid the full amount. You don’t have to pay any interest on the money you withdrew.
The Canada Revenue Agency (CRA) will send you an LLP Statement of Account each year with your notice of assessment, showing:
- Your LLP withdrawals,
- How much you’ve repaid so far,
- How much you still owe and
- How much you must repay the next year.
Essentially, the LLP works like a loan (without interest), where you can borrow money, provided you pay it back within a specific timeframe.
What are some other ways to pay for my education?
The LLP isn’t the only way to use your RRSP to pay for your education or training. You can also:
- Make an early withdrawal from your RRSP. You can make RRSP withdrawals whenever you want, and you’ll have to pay taxes on those withdrawals. Taxes will also be withheld from the amount you take out. But if you have little or no income in the year you go back to school, you can make a regular RRSP withdrawal while potentially in a lower tax bracket.
And unlike an LLP withdrawal, you don’t have any repayment options. The downside to this approach is that you’re dipping into your retirement savings and limiting its potential growth. Additionally, you won’t get your contribution room back.
Discuss which option is best for you with an advisor.
- Use your TFSA as an education fund. You could use your tax-free savings account (TFSA) for education costs because you can withdraw the funds tax-free and carry forward the contribution room. Plus, you’re not required to replace the money in the account.
- Open a Registered Education Savings Plan (RESP) for yourself. You can open an RESP for yourself if you plan on returning to school in the future.
A Sun Life advisor can help you decide which open is best suited for your needs.
Frequently asked questions
What programs qualify under the Lifelong Learning Plan?
Only full-time education or training programs qualify under the LLP. Whether the program you select is considered full-time depends on how the educational institution you’re enrolled at characterizes your participation. However, if you’re a person with a disability, you can qualify for the LLP if you’re enrolled on a part-time basis.
Can I use the LLP to pay for a child’s education?
No, you can’t use the Lifelong Learning Plan to finance your children’s education. If you’re looking to save money for your child’s future education, you can consider opening a registered education savings plan (RESP).
You could also use an existing TFSA as an education fund for your child.
How often can I participate in the LLP?
You can participate in the LLP as many times as you want over your lifetime. This is provided you’ve fully repaid previous LLP withdrawals and your LLP balance is 0.
What happens if I don’t pay back the LLP?
If you miss repaying the required installment in any year, you’ll have to pay taxes on the missed installment.
How much can I withdraw from the LLP?
Under the LLP, you can withdraw up to $10,000 per year from your RRSP (but there’s a maximum limit of $20,000) for full-time education or training.